Q&A with Melissa Clark-Reynolds ONZM

We were lucky enough to host Melissa Clark-Reynolds ONZM at our second Innovation Breakfast Series lectures at Lincoln University. We grabbed a couple of minutes with her after the presentation to briefly chat innovation, agtech and the future of food.

Lincoln Hub (LH): Hi Melissa, you talked a lot in your presentation about disruptive innovation in the technology and agtech industries. How important is it for businesses and CRIs (Crown Research Institutes) to adopt an innovation strategy?

Melissa Clark-Reynolds (MCR): To increase their likelihood of success, every company, big or small, should have an innovation strategy. However, depending on the size of that business, innovation strategies can look very different.

For example, for a large CRI or company to innovate, they must follow their most demanding customers and design processes for them. It’s important they focus energies into finding solutions for problems, not the other way around. It sounds obvious but I see this often in CRIs who try to solve very specific problems then go out looking for people who have those sorts of problems.

Take TomTom, they have great GPS technology but they’re a solution looking for a problem. In order to survive, you must have a strong customer focus and proposition – how can TomTom compete in a market where mobile phones come with built- in GPS technology?

LH: You say that “new competitors nearly always win” in the bottom end of a market. Why is that?

MCR: Smaller companies will always take customer share away from the big companies, particularly at the lower end of a market. This is simply to do with the nature of small companies – they are a lot closer to their customers so are more flexible to adapt their offering to meet their needs, and look for a solution to a specific problem in a more timely way. Small companies are agile and because of this are always improving their service and offering, a lot quicker than the larger ones.

It is very rare for the bigs guys to win in this space because they often blindsided by the little companies entering the market. Look at Lewis Road Creamery. Most of the growth in New Zealand’s milk consumption has come from this one company, and has taken customer share away from Fonterra and Goodman Fielder. Lewis Road are not creating a new market for milk, but what they’re doing is converting people from drinking ‘old’ milk to ‘new’ milk.

LH: What can New Zealand companies learn about innovation from the tech giants of Silicon Valley?

MCR: Big companies are designed to kill innovation. So often you see the Silicon Valley giants acquiring start ups, knowing that most are going to fail. Google has developed a competence for managing hundreds of start-ups within their organisation – Of 100 of them, three will turn into successful companies.

The Silicon Valley model is designed to waste that 97% of companies as fast as possible. It is very important to understand because as we pick those models up from overseas and bring them into New Zealand, we need to be very conscious of what innovation strategy we’re running.

If you’re going to spin out start ups or little innovations, the best thing to do is spin them right out. Meaning, let them have their own CEO and board and let them not report into the core in the same way. Most of the time if you manage a start up within the core, the profit formula, the resourcing, the people, the culture, the people you have already hired into the core will kill it. They have no desire to kill it, but the entire design of big companies is to kill innovation.

So the best advice I can give is let the start-ups you acquire do their thing. I think a company doing this well, that is large, is KiwiBank. They’re trying to spin out some little companies so it is possible.

LH: What is the biggest trend you have identified in the agriculture sector?

MCR: I spoke at the DairyNZ conference last year and I laughed at the idea of lab grown meat because I thought there was no way it could compete with our beautiful grass-fed beef. Actually I was right in one way but completely wrong in another in that a couple of weeks later we got to eat a lab-grown burger which looks, smells, bleeds, chews, cuts and tastes just like meat. The burger pattie is made from a GMO yeast, organic corn and organic soy and is higher in protein and iron than real meat, and of course, it has fibre as it is made from plants.

So, for New Zealand we have to figure out what we want to do. Do we want to offer the world the best high value meat, which makes sense to me, or do we dilute our brand and hope like hell we can play at the bottom of the market as well and offer lab grown meat? Can we be a commodity market at the same time as a value market?

Personally, I don’t buy it.  We are industrial food producers, even if we like to think of ourselves as boutique. In that case we need to chase the higher margin if we want to survive. That means supplying the most ethical, sustainable and most delicious meat (from animals) – if we try and play both ends then it will be very easy for us to lose the plot completely.

There’s a great little film out from Impossible Foods about lab grown meat.

About Melissa: Melissa became a professional director after 25 years experience as an entrepreneur and CEO of a number of technology companies. She is a Governor of Radio NZ, sits on the Boards of ACCURO Jasmax and Softed. Melissa is a Member of MPI’s Primary Growth Partnership Investment Advisory Panel and Chairs the LINZ Risk & Audit Committee.